Beijing Sends a Signal to Chinese Overseas Dam Builders

Grace Mang
Press conference on the newly released guidelines
Press conference on the newly released guidelines

The Chinese Government’s “Guidelines for Environmental Protection in Foreign Investment and Cooperation” (“Guidelines”) provide civil society groups with a new source of leverage when it comes to holding Chinese companies responsible for their environmental and social impacts overseas. In the form of the new Guidelines, the Chinese government has sent a strong signal to its companies that it expects them to act responsibly and lawfully when operating overseas. The Guidelines do not specify whether Chinese investments should or should not proceed and thus may be of limited use to civil society groups seeking to oppose a Chinese sponsored or developed projects. On the other hand, the Guidelines are still government policy and can thus be a useful tool for civil society seeking to hold Chinese companies to account.

The Guidelines cover the following key issues: legal compliance, environmental policies, environmental management plans, mitigation measures, disaster management plans, community relations, waste management, and international standards. The Guidelines contain twenty-two articles; however the key articles relevant to the Chinese overseas dam building can be grouped under two categories: community dialogue and mitigating environmental impacts. It is important to recognize that these Guidelines are non-binding with “should” being the strongest expression used and “could” being the weakest. 

Community Dialogue

Affected local communities feature prominently in the Guidelines, a reflection of the fact that in recent years, the lack of communication and respect for community views has been a major point of criticism of Chinese companies operating abroad. One of the very first articles of the Guidelines calls upon the companies to respect the cultural heritage of the local communities (Article 3).

While the track record of Chinese dam builders in conducting public consultations or keeping local communities informed of impacts may be poor, the Guidelines make it clear that Chinese companies need to establish a clear communication channel on environmental and social issues (Article 20). The Guidelines even suggest that companies host information workshops to communicate the project’s environmental impacts and better understand social impacts.

The Guidelines encourage companies to regularly release environmental information, including the plans and measures undertaken to comply with local laws and regulations (Article 18). This could include the disclosure of Environmental Impact Assessment Reports and Resettlement Action Plans, which to date have been difficult to obtain from Chinese dam builders.

Beyond maintaining good community relations, the Guidelines make it clear that in an emergency situation on a project site, a clear reporting and communications system should be established that includes informing the public (Article 14). An example of an emergency situation is the partial collapse of Datang’s Stung Atay Dam in Cambodia during project construction in December 2012.

Finally, the Guidelines establish that the principle of “mutual profits and benefits” should underpin how a company fulfills it responsibilities (Article 3), which could pave the way for community benefit-sharing schemes. In the case of the proposed West Seti Project in Nepal, for instance, the project developers the Government of Nepal and China’s Three Gorges Corporation have sought to address local opposition to the project by giving local populations between 2 to 5% of the equity in project (however, a Nepalese parliamentary committee originally recommended that as much as 10% of the project equity be set aside for the local population).

As Peter Bosshard observes in his blog “Holding Chinese Investors to Account,” although community relations are central, the Guidelines contain no references to the rights of communities or individuals. There is overwhelming acceptance at the international level that companies should respect human rights (e.g. UN Human Rights Council endorsed Protect, Respect and Remedy Framework), and there is evidence that Chinese companies agree with this (e.g. numerous Chinese overseas dam building companies have adopted the UN Global Compact for instance). Despite this, there remain serious examples of non-compliance or complicity by Chinese companies in appalling human rights abuses particularly in the context of resettlement, where consent from indigenous peoples are not sought (Nam Ou, Laos) and compensation is inadequate (Murum and Baram Dams, Malaysia) or remains unpaid (Patuca 3, Honduras). It would certainly be worthwhile for the Chinese government to consider in any future revisions of the Guidelines stronger regulations that prevent abuses against human rights by Chinese companies operating overseas.

Mitigating Environmental Damage

The Guidelines specify that Chinese companies must deal with project pollution or waste materials effectively (Article 10, 13, 14 and 16) through a variety of suggested measures such as environmental management plans and environmental pollution insurance. While the Guidelines do not ban Chinese companies from impacting protected areas or areas with significant environmental values (e.g. World Heritage sites, National Park), Article 15 does instruct companies to carefully consider the ecology of the local area and that damage to these areas be mitigated or restored.

The Guidelines require that environmental impact mitigation and protection measures be considered throughout the project cycle. Article 11 encourages companies to establish baseline environmental conditions (e.g. water quality, ecosystem surveys, fisheries surveys) with follow up monitoring and assessment to document the project’s impacts.

The Guidelines require that Chinese companies consider impacts on cultural heritage throughout the entire project cycle and mitigate any negative impacts (Article 9). Mitigation, however, may not be enough to protect China’s international reputation. There are certainly numerous destructive dam projects whereby the impacts cannot be mitigated or original ecosystem functions restored. The Chinese are supporting the Gibe III project in Ethiopia, which once complete, will devastate the lives of hundreds of thousands living around Lake Turkana and the Omo River, depriving them of their only water source. The project, which had languished for years, was only made possible by a loan by China’s ICBC Bank, the project’s only international source of funding. Involvement in such destructive dam projects in the future might be prevented if the Guidelines contained no-go zones and prohibition on projects with significant environmental and social impacts that cannot be mitigated.

Next steps

Even though it is unlikely that the Guidelines will translate into immediate changes at project sites, civil society groups and affected communities should start using the Guidelines right away. The Guidelines create new window for civil society to engage with Chinese companies abroad, obtain project information and documents, and hold them to a higher level of responsibility around mitigating damages. The Guidelines offer NGOs a strong tool with which to make their case for Chinese companies to respect their communities and avoid environment harm. 

More information: 

Further analysis, reporting and translations of the government Guidelines can be accessed here

Thursday, April 18, 2013